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Deciding When to Buy Life Insurance for your Child

We don’t want to think about it, but everyday we’re faced with the possibility that our child could get injured, ill, or even die. And if you’re like most families, you don’t have enough emergency funds set aside for possible medical or funeral bills. Would it be wise then to get your child life insurance policy? And if yes, when should you get it?

Here are some things to consider when buying life insurance for your child:

It’s easier to get insurance coverage for younger kids. You don’t know if your child will develop a disability or a serious illness as he grows up. Such an event can make them uninsurable in the eyes of many insurance companies, or at least it will lessen the policy’s coverage and pay-off. The earlier you buy a policy, the higher are your chances of getting a good deal.

The earlier you get a policy, the sooner your child will get coverage. This is the clearest advantage of getting life insurance early; it allows you to be prepared for whatever may come in a child’s future soon. Many presume that children could hardly get into emergencies that might require a life insurance policy, but we can never be really sure. We don’t want to think about it, but it happens.

A well-paid life insurance policy is an investment. The benefit of a life insurance policy is not limited to medical emergencies. It can also be a way to secure loans as it is respected as collateral. If you don’t have an educational policy for your child, a life insurance policy that you took out early on can help you get an educational loan. It may even get you a business loan! This is something to think about when your personal credit standing is far from sterling.

Do you have personal resources that would make life insurance redundant? Insurance companies would of course tell you that it costs an arm and a leg to finance funeral and burial expenses should your child pass away. But this is not always the case. For instance, if your family already owns a lot in cemetery, or has connections with funeral service-providers, a policy that only covers death benefits may not be practical. If you have an excellent portfolio, and you feel that you’re secure enough that you can anticipate immediate and long-term expenses, then don’t get coverage.

Do you have loved ones who needs life insurance more? If cash is limited, you would have to make certain choices. For instance, if you can only afford to pay for one life insurance policy, and you have a parent who is yet to be insured, it might be more practical to take out a policy for your parent first. The same goes if the insurance policy would come at the cost of day-to-day living expenses. When funds are really low, focus on the more urgent and pressing.

Is your child at high risk? Life insurance is advisable for kids who are at high risk for injury and disability. This includes children who are athletes or children who have been, unfortunately, exposed to potentially toxic material. If you also have a family history of debilitating illnesses, then it might be a good idea to insure your child as early as possible.

Lastly, do you have a better investment option? Most policies do not significantly increase your investment. Their value is in their reliability during moments of emergencies, but generally their monetary return is limited. If you can use your cash for another investment with a better profit margin, then consider going for the business investment instead of the insurance policy. Perhaps once this business takes off, you’ll have extra to invest in a life insurance policy for your child.

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